Wall St rises as traders wait for Yellen

Not since the presidential administration of Lyndon B. Johnson have stocks done so little for so long.

Among stocks making moves on Friday, Herbalife fell $1.43, or 2.3 percent, to $60.50 after news reports that that Carl Icahn, the company’s biggest shareholder and defender, has been trying to unload his stake in the embattled company.

The Dow Jones industrial average fell 59 points, or 0.3 percent, to 18,390 as of 1:15 p.m.

About 6.57 billion shares changed hands in USA exchanges, compared with the 6.16 billion daily average over the last 20 sessions.

“Future policymakers could find that they are not adequate to deal with deep and prolonged economic downturns”, Yellen said, and may need to look at some of the more adventurous ideas under discussion. Prices settled higher Thursday (http://www.marketwatch.com/story/oil-prices-waver-as-disappointing-us-inventory-data-fuel-oversupply-concerns-2016-08-25)-their ninth winning session out of the last 10. “There’s no clear direction and that’s why we’re sitting in these ranges”.

Stocks later reversed course to trade lower after hawkish comments from Fed Vice Chair Stanley Fischer raised the possibility of a rate hike as soon as next month.

The Fed chair, however, added that FOMC decisions would always depend on incoming data and hence its perception of increasing rates could change in the future. That sent the SP 500 tumbling 20 points in 30 minutes.

Reports earlier showed a surge in American new-home sales, but a slowdown in manufacturing. But at the same time, business investment has been “soft” and USA exports have been held back by “subdued foreign demand” and the strong dollar, Yellen said. That’s up from 42 percent two weeks ago, based on fed fund futures data compiled by Bloomberg.

Traders since last week were betting that the Fed will not act at least by its December meeting because of a mixed economic performance, as the economy is creating more jobs than expected but inflation is showing a weak trend. “I think that the Fed wants to get the market to start pricing in a hike for this year, which they weren’t doing earlier, and now I’m seeing the probability of a hike by December has gone up slightly over a coin toss”.

Beneath the surface of a sideways market, leadership has been shifting away from defensive industries that have led the SP 500.

In Asia, Japan’s Nikkei 225 fell 1.2 percent after consumer prices fell the most in three years in July. PGE declined 1.34, or 2.1%, to 62.10.

Economists have said the US elections also add a measure of uncertainty to global economic outlook. Officials began the year expecting to raise rates four times in quarter-point increments but have delayed moving them because economic growth disappointed in the first half of the year and because they were uncertain about developments overseas and about the strength of the US job market after some soft reports. “But under conditions when we’re seeing employment move [higher with] low and stable inflation, I think it’s fair to say we could remove some of that accommodation”.